Health Care Reform

Floor Speech

HEALTH CARE REFORM -- (Senate - October 22, 2009)

BREAK IN TRANSCRIPT

Mr. WHITEHOUSE. I am delighted to join the discussion. One other point merits mention about a public option. The current business model for health care in America is not a good one. The insurance companies try to--if you are not healthy--make sure you never get insurance in the first place. If they give you insurance and then you get sick, they will look for loopholes and try to throw you out. Then they will try to control the way you get treated by your doctors. So your doctors have to spend as much as half of their time on the phone trying to fight and get you the treatment they know is right for you, but they have to clear it with the insurance company, which has a vested interest in taking as long as it can and causing as much trouble as it possibly can because some doctors and patients will just give up.

On the other side, in terms of the quality of care, with all that stuff going on, we have a country in which the quality of care is far below our competitors by innumerable measures. Part of it has to do with the way the system works.

We had an intensive care unit reform that we fought through in Rhode Island that was modeled on the keystone project in Michigan. In Michigan, they went into intensive care units and said: We are going to eliminate hospital-acquired infections, get rid of those. In 15 months, they saved 1,500 lives, $150 million, and 81,000 days that patients would have spent in the hospital with those infections, but they didn't have to because they got out without them. They invested in that.

That is the kind of thing a public option can invest in because it will be around, it is not profit motivated, and it wants to do the right thing for people.

Mr. BROWN. How does that work? In the Michigan hospital, they used a checklist and all this to try to cut down on infections. How does public option interface with the hospital to try to get them to do that?

Mr. WHITEHOUSE. It will be willing to take the long view and say: You know what. This is the right thing to do.

Mr. BROWN. Invest the money now, and the insurance companies will not do that.

Mr. WHITEHOUSE. Insurance companies have had a long time to do this, but they have not done it. If you want to believe that by passage of this legislation, all of their motivation and their business model, the way they work, is going to spontaneously change, and they will start doing things they have never done before, is one thing to believe. I think prudence and experience and a practical and serious appreciation of how urgent our situation is all counsel against believing a sudden epiphany happening in the halls of the big insurance companies and, instead, put a new entity on the field, which would be easier to start up and bring a new business model in with it. It is not going to have all that tradition and history. You know, you get in a rut. The only way to change the business model in health care is to have a new entrance--a public entrance and a nonprofit entrance and one that has a dispersed interest in the health of the American people rather than the wealth of the insurance company shareholders.

Would the Senator from Oregon like to jump in?

Mr. MERKLEY. Mr. President, I am happy to jump in. Last weekend, I was over in central Oregon--in Bend--and I was reading local clips. One of the articles that came across was about a lawsuit that had been filed. The article said that a year before an individual had passed away because they had repeatedly asked for an MRI to address a pain he had in his back. It turned out to be a tumor, and it killed the individual. But they could never get the MRI approved. The doctor requested it, but it wasn't approved. Another doctor requested it--a consulting doctor--and it wasn't approved. Eventually, the tumor was beyond the point of being able to be operated on. The individual passed away.

That article talked about a second parallel situation that is unfolding right now. The individual is still alive but also is seeking an MRI and is being turned down by the same company. I thought, that is how an insurance company makes those profits--by turning down requests for coverage. Hopefully, it doesn't come to the point that a diagnostic exam is denied to the degree that someone is going to die, but it happens. It happened in this particular case.

The motivating factor of the management of the company was to maximize profit, not to maximize healing. The Senator from Rhode Island served as insurance commissioner. I am sure he saw examples of this. If I heard him right, he is saying that in a public option the motivation is healing, not profit, and therefore has a long-term perspective. Therefore, it can invest in prevention, in disease management. A private company will not assume that its customer, the policyholder, will still be a customer in 10, 15 years. They take a short-term perspective. That is to minimize the amount you spend on health care. But the longer term perspective would be much better for the quality of life of our citizens, and certainly investment in prevention and disease management might have tremendous rewards in bending the cost curve.

Mr. WHITEHOUSE. That is precisely accurate. If you are a for-profit insurance company and your motivation is to make money, and if you assume your customers are going to stay with you--how long does somebody stay with a company before they change jobs or move to a different State? Five to ten years? You put down 100 cents on the dollar of a prevention strategy or a wellness strategy and help that individual, and if it is an illness, it is going to show up 8, 9, or 10 years later and you haven't saved yourself any money. You have done the right thing for the customer but haven't saved yourself any money. So you have a huge built-in bias to underinvest in wellness and prevention.

Sure enough, we are a country that underinvests dramatically in wellness and prevention. It is impossible not to connect the dots and see that the reason we are so underinvested in wellness and prevention has to do with the motivation of the for-profit insurance sector.

(Mr. UDALL of New Mexico assumed the chair.)

Mr. KAUFMAN. Mr. President, one of the things that concerns me about this is we hear about the fact that we should not have a public option because it is the government doing this and that. When I was in business school, I learned that the beauty of the private sector is competition. If you don't have competition, you will not get the advantage in the private sector. I don't care how you structure things. I want to read off some States.

The problem is, in so many States we have no competition. The only way we are going to get competition is through some kind of a public option.

In Hawaii, 98 percent are with two insurers. In Rhode Island, it is 95 percent. In Alaska, it is 95 percent. Vermont, it is 90 percent. Alabama, it is 88 percent. In Maine, it is 88 percent. In Montana, it is 85 percent. In Wyoming, it is 85. You can go down the list to Florida, which is No. 42, and 45 percent of all the health care is with two firms. The next one is No. 43, California, and it is 44 percent.

You cannot get the advantage of free enterprise if you do not have the competition. What this is about--the whole reason to have a public option and the only way you are going to bend the cost curve and get this turned around is to have competition. In most of the States, you are not going to have competition if you don't have the public option. So the public option is turned on its head.

When I hear people on the Senate floor and on television talk about government, government, the one thing government by itself cannot provide is competition. In some cases, it is the only way we can provide competition.

Mr. WHITEHOUSE. It is a little ironic to have the insurance industry complaining about government entering into the role as a competitor to the insurance industry, which is the best possible way government could enter into this equation, when, for years, they have fought for and protected a government role in the health insurance industry, which is to protect them, the insurance industry, from the antitrust laws. Government has been involved in health insurance for a long time in the worst possible way--protecting these insurance companies from being subject to antitrust laws, like every other business in America except, I guess, Major League Baseball.

Mr. KAUFMAN. It is hard to believe when you hear it on the floor--and how do they get the ads straight? First, they say government cannot do anything right. The next ad says we cannot just have government because government is going to take away our business. Either government is efficient and organized or it is not.

So what you begin to see is that there isn't much continuity to the arguments against a public option. They bring out the same old arguments we heard in 1994 about the public option--and then the public option was not like what we talked about before. First, it is an option. People don't have to do it if they don't want to.

It is inconceivable to me--and we have debated this for a long time--I am trying to see the first indication of how we have competition in these States where the overwhelming amount of business is just in two firms. Nobody has come to me and said: How are you going to have competition? I believe in competition.

Mr. WHITEHOUSE. Particularly when those two firms aren't subject to the antitrust laws, they are able to price-fix and do things like that. For them to complain about competition after having used government to wall themselves off from the basic law that protects competition, you kind of have to believe the irony department is open late at night at insurance companies.

Mr. BROWN. We know what they say about why they are against the public option. We know what conservatives--many of whom have been close allies of the insurance industry in their campaigns for years--we know what they say: government take-over. The government cannot do anything right, and the government will run them out of business.

We know the real reason the insurance industry is fighting this: they have has a 428-percent increase in their profits. As they get bigger and bigger and squeeze smaller insurance companies out, they know the public option will mean no more huge profits.

We know the insurance industry will continue to make profits because they are smart and sometimes they are well run. They have been around a long time. They are going to have marketplace advantages. We know CEOs of the 10 largest companies made an average of $11 million. That means a lot of vice presidents are making $3 million, $4 million, $5 million, and $6 million. They like that gravy train. Of course, the people making the decisions at the insurance companies, doing the lobbying, hiring the lobbyists, and hiring the PR firms, and making decisions to run television ads, these are all people who want this to continue.

There was an article in the Time Magazine that came out today that every Member in Congress in both Houses has an average of 2.3 industry lobbies--that may just be the drug companies or insurance companies together. There are hundreds of lobbyists around here to protect health insurance profits and to make sure the top executives are making $6 million, $8 million--up to Aetna's CEO, who makes $24 million a year.

They have a lot at stake in this. But you know what, we have a lot more at stake. What we have at stake is we have people--we can read letters when we come to the floor. A lot of us day after day read letters from people who have preexisting conditions and have lost insurance or a 24-year-old who just graduated from college or just came back from the military and cannot get insurance because they had asthma, as my wife does, when they were 12 years old and cannot get insurance or their mother got really sick and the insurance practice called, I say to Senator Whitehouse, rescission--that is a fancy word--we are dumping you off the insurance because you cost us too much money.

It goes back to what you were saying. The business model is, we do not want to insure sick people or people who might get sick, and if we do insure them, we want to find ways not to honor their claims, not to pay their claims. The industry will fight like a dog, in many cases, to keep from paying those claims. It is a dysfunctional model in business. It is bad for our society. It is really only correctable by a public option, injecting that competition and keeping those companies honest.

Mr. WHITEHOUSE. One of the ironies in all this is that whole scheme of the insurance companies is actually increasing the cost of American health care. I think from 2000 to 2006 the administrative costs of insurance companies went up over 100 percent. So they are loading on more and more people whose purpose is to do just what you said, which is to interfere with the doctors, to require more and more prior approvals before you can get treatment, to do more and more claims denial--all of that. And then not only does that add costs to the health care system within the insurance company, but then the doctors have to fight back.

In Rhode Island, I go all around to doctors and medical practices and community health centers. The standard number that I hear is that 50 percent of the personnel of a doctor's office or a community health center is not dedicated to providing health care but dedicated to having to fight back against the insurance industry.

I visited the Cranston Community Health Center a few months ago, and they said that more than 50 percent of their personnel is devoted not to the health care function but to the ``fighting with the insurance company'' function. Plus they have to spend $300,000 a year that could go to health care for consultants and computer programmers who help them fight with the insurance companies. It is not just half the personnel, it is also a $300,000 consulting expense.

You put the two together, and it is a huge cost and a great opportunity for a public option to cut through all of that, to knock off the administrative expense on their side, costs on the doctors' side, and bring costs down.

(Mr. KAUFMAN assumed the chair.)

Mr. BROWN. They use the term ``medical loss ratio.'' They want to keep the medical loss ratio as low as possible. The medical loss ratio is often 75 percent. That means that 75 cents on the dollar goes to actual health care, doctors, hospitals, physical therapists. The other 25 percent is insurance company overhead. They call every dollar they spend on health care a loss. That is the way they think. That is the insurance company model. So if the medical cost ratio goes up to 85 percent--in other words, they spent 85 percent on medical care--they don't like that. They want the medical cost ratio to stay low because the rest is marketing, profits, and insurance company salaries. It is a curious turn of a phrase. I think they are phasing that term out because I think they know ``medical loss ratio'' does not sound good to them.

Mr. UDALL of New Mexico. Something Senator Whitehouse mentioned earlier that should be driven home very strongly is the antitrust part of this. I am not sure people out there know what we are talking about when we say these large insurance companies that are making all these profits are exempt from the antitrust laws. We know. We were attorneys general. We had to get into antitrust cases as attorneys general.

What it means is that the antitrust laws say: As you get bigger and you get a more concentrated market, the government can weigh in and say the market is too concentrated; there is not enough competition. What we have done with these insurance companies is we have said: Oh, no, no, we are not going to use the antitrust laws; we are going to exempt you from the antitrust laws. That is something I think the average citizen does not realize. It applies in most of the rest of the economy to encourage competition, but it isn't here. I know Senator Brown and Senator Merkley also understand this point. This is a very important point.

Mr. WHITEHOUSE. There is an alarm bell. An alarm rings when a market is something called heavily concentrated. The Department of Justice has standards for when a market is heavily concentrated. When a market is heavily concentrated, that means they look particularly closely for anticompetitive conduct. Of course, they don't look at the insurance industry because they are exempted from the antitrust laws. But 94 percent of the major metropolitan areas in America--nearly everyplace--is heavily concentrated. It is in that uncompetitive danger zone.

The public option is not only a useful alternative, but we are dealing with a market where competition is in a very poor state. So it is not as if you are adding an extra competitive element to an already competitive market. You are adding an extra competitive market to a market that is almost virtually certain to be heavily concentrated and to show none of the signs of healthy competition that one looks for in a healthy marketplace.

Mr. MERKLEY. So not only do we have little competition because there are many markets with only a couple of companies providing services, but because of the antitrust provisions, those companies are allowed to talk to each other, to collaborate on what rates they charge or what deals they make with providers, further reducing competition, even when there are a couple companies in the market.

If we take and flip this notion of competition and look at it through the eyes of the individual working American, then what it becomes is choice. Lack of competition in the marketplace equals lack of choice for individual Americans.

I read this story in the press last weekend in central Oregon about this fellow who could not get an MRI. He had probably very few choices about what insurance company he could go to. Would it not be great if he would have the ability during an open window each year to be able to say: I am not satisfied with the service I am receiving or I am not satisfied with the premium I am being charged, and I want to change to a different company or a different provider to see if they do a better job. That is the heart of the American capitalist system if there is competition and, therefore, choice for the individual. These two things go hand in hand.

When folks say that what will happen with a public option is that it will reduce choice, I must say, what are they thinking, because we don't have choice now. But if you bring in a community health option or a public option, then you do have real choice as a citizen. You can march with your feet. You can sign up for this program or this program or this program.

We have competition between governmental opportunities and nongovernmental in other areas. I don't think I would like to say to the citizens in the State of Oregon: You no longer have a choice of mailing a letter with the post office. Everything you do regarding the mail has to be through a private company. I don't think I would like to say to the citizens of Oregon: You no longer have the choice of sending your kids to public school. You have to choose between solely private options.

It is a positive thing to have competition, and having a strong, robust public option is going to create a real opportunity for our citizens to choose and, in so doing, create this competition, improve service, and lower costs. If we don't lower costs, then we truly have not succeeded in health care reform.

Mr. WHITEHOUSE. Think how many Americans from Oregon or from Ohio or from Rhode Island or from Delaware, the Presiding Officer's home State, have been able to achieve their dreams because they were able to go to a public university in their home State as opposed to private colleges. I have nothing against private colleges and

universities. I went to one. I think they are wonderful. But I am very proud of the University of Rhode Island, and for many Rhode Islanders and many people who come to Rhode Island to go to URI, that is a great opportunity for them. The notion that it should not be there because it is government run and government supported and, therefore, makes Brown University noncompetitive is just crazy. The facts belie it.

If you look even closer--I know the Senator from Oregon has talked before about the workers' compensation example--half of the States in the country have public options that operate in an insurance market and provide workers' compensation. Indeed, some of the strongest advocates against a public option in health insurance on the other side of the aisle have workers' compensation public plans in their home States.

Mr. BROWN. If I may ask a question, I remember the Senator from Rhode Island mentioned some very prominent members of our Health, Education, Labor, and Pensions Committee, on which all three of us sit, that they were some of the strongest critics of the public option, but their States, if I recall, have, in some cases, a single-payer plan.

Mr. WHITEHOUSE. The Republican leader, Senator McConnell, has a public option in his home State of Kentucky that provides workers' compensation insurance in competition with private insurers. It has been doing it for years. It has a significant market share. I don't recall that he has ever criticized that plan. I think it seems to be helpful.

Mr. BROWN. It probably makes them both work better, public option and private work better.

Mr. WHITEHOUSE. In Arizona, our wonderful colleague, Senator McCain, with whom I am very proud to serve, is also very antagonistic toward the notion of a public option. But in Arizona, if I recall correctly, their public option has been in the workers' compensation market for 80 years.

So the notion that when you have a public option it is going to creep, crawl, and take over and force out competition is proven wrong by the actual facts and history of some of the States of Senators who are here making that very argument.

Mr. BROWN. Didn't you mention the other night the State of Wyoming, which is represented by the ranking Republican on the Health, Education, Labor, and Pensions Committee--before I ask about Senator Enzi and that committee, one of the things I think is important to remember when I hear people say this is a partisan effort, we all remember in our committee we did 11 days--there was no hurry on this--11 days of markup, longer than almost any of us can remember in terms of that much time in committee, debating and vetting. We adopted 161 Republican amendments. I voted for almost all of them. I know Senator Whitehouse and Senator Merkley did most of them, too, and there are some fundamental questions on which we have ideological differences. We made a better bill as a result. But Senator Enzi's State has a public option or only a public plan? I cannot remember.

Mr. WHITEHOUSE. In Wyoming, the workers' compensation system is run entirely by the government. It is a single-payer public plan. As far as I can tell, all of the business community in Wyoming is perfectly comfortable with that plan.

One of the concerns people raise about a public plan is that it will give terrible public service, terrible customer service. It has been described as if you take the IRS and a department of motor vehicles and put them together, that is the kind of customer service you will get from a public plan. I doubt very much that the public plan in Wyoming, which is a single-payer, government public plan, gives that kind of terrible public service because if it did, I would expect the Wyoming business community to be up in arms about the way they are being treated by their only choice of workers' compensation insurer. Judging from the track record, it seems they are pretty satisfied with it.

I think when you actually go out into the field and look at examples of competition, whether it is the Postal Service, higher education, or these public plans that do workers' compensation in half of our States, we find that a lot of the concerns the people have raised, a lot of the fears that seem to animate this debate actually, in reality, appear not to prove out.

Mr. BROWN. I would add from what Senator Whitehouse said that you can look another place and you can see how in very quantitative and very specific, giving example comparisons that Medicare versus private insurance--we know the cost of bureaucracy, the cost of marketing, the cost of future profits, and the cost of high executive salaries. Private insurance means they have a 15-percent absolute minimum, more than 20, 25, sometimes 30 percent administrative costs. Medicare has somewhere around 3 percent overhead, administrative costs. Medicare is a public plan. The private insurance companies really don't compete very well with Medicare in terms of measuring them for administrative costs.

Whether you look at workers' comp plans when there is a public option or you look at workers' comp plans in Wyoming where it is single-payer or you look at Medicare, you can see that this argument they make that the government can't do anything right is pretty wrongheaded, especially when they are afraid that government does things so efficiently, it is going to run them out of business.

We know public plans can coexist, side by side, with private plans and make the private plans a lot better. I argue the private plans will make the public plans perhaps more flexible too. It will help both.

Mr. WHITEHOUSE. That is what competition is all about.

Mr. BROWN. That is what competition is all about.

Mr. WHITEHOUSE. I have to depart, and I yield the floor to the distinguished Senator from Ohio. But before I go, I want to express my appreciation to him for convening us and for his energetic and constant advocacy on this subject. I think he has been a wonderful leader of our caucus, and I wish I could stay longer, but I have a plane awaiting me.

So I yield to the Senator from Ohio.

Mr. BROWN. I thank Senator Whitehouse, and I will wrap up too. I think this discussion is much better than a speech, frankly, from any one of us. I appreciate the contribution of the Presiding Officer, Mr. Kaufman, the Senator from Delaware, to this discussion, more than debate, as well as Senator Merkley, who was with us, and Senator Udall of New Mexico.

As I close, let me run through a couple of these posters reflecting the monopoly that has caused so much hardship for so many people in State after State after State. In my State, two insurance companies have a huge part of the market. In parts of southwest Ohio--the Cincinnati and Dayton areas--two insurance companies have about 80 percent of the market. In Senator Udall's State, it is very high. In some States it is even higher.

When you have that lack of competition in States, you can see what it brings to us after that. It brings huge profits. Having so little competition, it means these insurance companies get larger and larger and push out smaller insurance companies and we end up with two or three companies. Without competing much with each other, what do you end up with? You end up with a 428-percent increase in profits over 7 years. You end up with the 10 top industry CEOs making $118 million, headed by Aetna's CEO making $24 million last year. So what happens? Forty-seven million Americans don't have insurance. Insurance premiums more than doubled in 9 years. If we do nothing--as many on the other side suggest, and certainly the insurance companies would like that--we will see insurance premiums double again in the next 7 or 8 years, putting such a burden on small businesses and making our big companies less and less competitive internationally. We all know what that means in terms of jobs for our people, especially in manufacturing.

Again, what fuels all this? What fuels all this and all these dollars they are making is the insurance company business model. The insurance company business model is to deny care--to deny insurance, to start with--by using very sophisticated sales practices to keep people from even buying insurance if they are sick, if they have a preexisting condition that might be expensive. That is part of the business plan. The other end of the business plan is to deny care as often as they can for people who have insurance.

So we know what we need to do. We know a public option will make a huge difference in keeping the insurance industry honest. A public option will make a huge difference in providing competition. And a public option will make a huge difference in keeping prices down. That is why we are here tonight. That is why I appreciate the work of Senators KAUFMAN, UDALL, MERKLEY, and WHITEHOUSE, and why I believe come December, when this work is completed on this health insurance bill--which, frankly, our government has been working on for 75 years, since Franklin Roosevelt tried it--we are going to finish with a good strong plan, with a robust public option that will make a huge difference in people's lives.

Mr. President, I yield the floor, I thank my colleagues, and I suggest the absence of a quorum.

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